But the senator next tells us that there is three hundred millions of banking capital in the Union, and that it is real bona fide solid capital, as much so as the plantations of the South. This is certainly news to me. I had supposed that this vast amount was little more than a fictitious mass of credit piled on credit, in the erection of which but little specie or real capital was used; and that, when a new bank was created, the wheelbarrow was put in motion to roll the specie from the old to the new institution, till it got fully under way, when it was rolled back again. But it seems that all this is a mistake; that the whole capital is actually paid in cash, and is as solid as terra firma itself. This cer tainly is a bold assertion, in the face of facts daily occurring. There have been, if I mistake not, four or five recent bank explosions in the senator's own town, in which the whole vanished into thin air, leaving nothing behind but ruin and desolation. What has become of that portion of his solid capital? Did the senator ever hear of a plantation thus exploding and vanishing? And I would be glad to know how large a portion of his three hundred millions of solid capital will finally escape in the same way? A few years may enable us to answer this question.

The senator next, by way of illustration, undertook to draw a distinction between bank credit and government credit, or public stocks, in which he was not very successful. It would be no difficult task to prove that they both rest substantially on debt, and that the government stock may be, and is to a great extent, actually applied in the same mode as bank credit in the use of exchanges and business. It in fact constitutes, to a great extent, the very basis of banking operation; but, after having occupied the Senate so long, it would be unreasonable to consume their time on what was introduced as a mere illustration.

The senator next undertook to prove the immense advantage of banking institutions. He asked, What would be done with the surplus capital of the country, if it could not be invested in bank stocks? In this new and growing country, with millions on millions of lands of the best quality still lying unimproved; with vast schemes of improvements, constantly requiring capital; with the immense demand for labour for every branch of business, the last question I ever expected to hear asked is that propounded by the senator. I had supposed the great difficulty was to find capital, and not how to dispose of it, and that this difficulty had been one of the main reasons assigned in favour of the banking system.

The next benefit he attributed to the system was the vast amount of lands which had passed out of the hands of the public into that of individuals of late, which he estimated, during the last three years, at thirty-six millions of acres, forming a surface equal in extent to England, and which, he stated, would rise in value greatly, in consequence of their passing into private hands. That this immense transfer has been effected by the banks, I admit; but that it is to be considered an advantage to the country, I certainly never expected to hear uttered anywhere, especially on this floor, and by one so intelligent as the senator. I had supposed it was infinitely better for the community at large, and particularly for those not in affluent circumstances, that the lands should remain in possession of the government than of speculators, till wanted for settlement; and that one of the most decided objections to our banking system is, that it becomes the instrument of making such immense transfers whenever the currency becomes excessive. This is a point not without interest, and I must ask the Senate to bear with me while I pause for a few moments to explain it.

The effect of an expanding currency is to raise prices, and to put speculation in motion. He who buys, in a short time seems to realize a fortune, and every one is on the look-out to make successful investments; and thus prices receive a constant upward impulse, with the exception of the public lands, the price of which is fixed at $1 25, excepting such as are sold at public auction. The rise of other landed property soon creates a new demand for the public lands, and

speculation commences its giant operations in that quarter. Vast purchases are made, and the revenue of the government increases in proportion to the increased sales. The payment is made in bank-notes, and these pass from the land-offices to the deposite banks,. and constitute a large surplus for new banking facilities and accommodations. Applicants from all quarters press in to partake of the rich harvest, and the notes repass into the hands of speculators, to be reinvested in the purchase of public lands. They again pass through the hands of receivers, and thence to the banks, and again to the speculators; and every revolution of the wheel increases the swelling tide, which sweeps away millions of the choicest acres from the government to the monopolizers for bank-notes, which, in the end, prove as worthless as the paper on which they are written. Had this process not been arrested by the Deposite Act of 1836, and had the banks avoided an explosion, in a short time the whole of the public domain, the precious inheritance of the people of this Union and their descendants, would have passed through the same process with the thirty-six millions of acres which the senator so highly commends. What took place then will again take place at the very next swell of the paper tide, unless, indeed, this bill should become a law, which would prove an effectual check against its recurrence.

The senator next attributes our extraordinary advance in improvement and prosperity to the banking system. He puts down as nothing our free institutions; the security in which the people enjoy their rights, the vast extent of our country, and the fertility of its soil, and the energy, industry, and enterprise of the stock from which we are descended. All these, it seems, are as dust. The banks are everything, and without them we would have been but little advanced in improvement or prosperity. It is much more easy to assign our prosperity to the banking system than to prove it. That in its early stages it contributed to give an impulse to industry and improvement, I do not deny; but that, in its present excess, it impedes rather than promotes either, I hold to be certain. That we are not indebted to it for our extraordinary advance and improvements, wholly or mainly, there is an argument which I regard as decisive. Before the Revolution we had no banks, and yet our improvement and prosperity, all things considered, were as great anterior to it as since, whether we regard the increase of population or wealth. At that time not a bank-note was to be seen, and the whole circulation consisted either of gold and silver, or the colonial paper money, which all now, and especially the senator, consider so worthless. Had the senator lived during that period, he might, with equal plausibility, have attributed all the improvement and prosperity of the country to the old colonial paper money, as he now does to the banks; and have denounced any attempt to change or improve it as an overthrow of the credit system, as warmly as he now does the separation of the government from the banks. I tell the senator that the time is coming when his present defence of the banking system, as it is now organized, will be considered as extraordinary as we now would regard a defence of the old and exploded system of colonial paper money. He seems not to see that the system has reached a point where great changes are unavoidable, and without which the whole will explode. The state of its manhood and vigour has passed, and it is now far advanced in that of decrepitude. The whole system must be reformed, or it must perish in the natural course of events. The first step towards its renovation is the measure he denounces in such unmeasured terms-the separation from the government; and the next a separation between discount and circulation. The two are incompatible; and so long as they are united, those frequent vicissitudes of contractions and expansions, to which bank circulation is so subject, and which is rapidly bringing it into discredit, must continue to increase in frequency and intensity, till it shall become as completely discredited as Continental money.

The senator seems not to be entirely unaware of the danger to which the system is exposed from its frequent vibrations and catastrophes. He tells us,

by way of apology, that had it not been for the specie circular, the present catastrophe would not have occurred. That it hastened it, I do not in the least doubt; but that we should have escaped without it, I wholly deny. The causes of the explosion lay deep-far beneath the circulars, and nothing but the most efficient measures, during the session immediately after the removal of the deposites, could have prevented it. That was the crisis, which, having passed without doing anything, what has since followed was inevitable. But admitting what he says to be true, what a picture of the system does it exhibit! How frail how, unstable must it be, when a single act of the executive could bring it to the ground, and spread ruin over the country! And shall we again renew our connexion with such a system, so liable, from the slightest cause, to such disasters? Does it not conclusively show that there is some deep and inherent defect in its very constitution, which renders it too unsafe to confide in without some radical and thorough reform?

The senator himself seems conscious of this. He entered into the question of its expansions and contractions, and suggested several remedies to correct an evil which none can deny, and which all must see, if not corrected, must end in the final overthrow of the system. He told us that the remedy was to be found in the proportion between bullion and circulation, and that the proper rule to enforce the due proportion between the two was, when exchange was against us, for the banks to curtail. I admit that the disease originates in the undue proportion, not between bullion and circulation, but between it and the liabilities of the banks, including deposites as well as circulation (the former is even more important than the latter), and that the remedy must consist in enforcing that proportion. But two questions here present themselves: What is that due proportion? and how is it, under our system of banking, to be enforced? There is one proportion which we know to be safe; and that is when, for every dollar of liability, there is a dollar in bullion or specie; but this would bring us back again to the old, honest, and substantial Bank of Amsterdam, so much abused by all the advocates of banks of discount. If that proportion be transcended-if we admit two or three to one to be the due proportion, or any other that would make banking more profitable and eligible than the mere loaning of money, or other pursuits of society, the evil under which we now suffer would continue. Too much capital would continue to flow into banking, to be again followed by the excess of the system, with all its train of disasters. But admit that such would not be the fact, how are we to compel the twenty-six states of this Union to enforce the due proportion, all of which exercise the right of establishing banks at pleasure, and on such principles as they may choose to adopt? It can only be done by an amendment of the Constitution; and is there any one so wild and visionary as to believe that there is the least prospect of such an amendment? Let gentlemen who acknowledge the defect. before they insist on a reunion with a system, acknowledged to be exposed, as as it now stands, to such frequent and dangerous vicissitudes, first apply a remedy and remove the defect, and then ask for our co-operation.

But the senator tells us that the means of enforcing the due proportion is to be found in the regulation of the exchanges; and for this purpose the only rule necessary to be observed is to curtail when exchanges are against us, and as a counterpart, I suppose, to enlarge when in our favour. How much dependance is to be put on this rule, we have a strong illustration in the late catastrophe, under which the country is now suffering. The exchanges remained in our favour till the very last; and before the rule, on which the senator so confidently relies, could be applied, the shock was felt and the banks ingulfeed; and this will ever be the case, when preceded by a general expansion in the commercial world, such as preceded the late.

The cause of that commenced on the other side of the Atlantic, and ciriginated mainly in the provisions on which the recharter of the Bank of England

was renewed, which greatly favoured extension of banking operations in a country which may be considered as the centre of the commercial system of the world. The effect of these provisions was a depreciation of the value of gold and silver there, and their consequent expulsion to other countries, and especially to ours, which turned the exchange with England in our favour; and which, in combination with other causes, the removal of the deposites, and the expiration of the charter of the late Bank of the United States, was followed by a great corresponding expansion of our banking system. The result of this state of things was a great increase of the liabilities of the banks compared with their specie in both countries, which laid the train for the explosion. The Bank of England first took the alarm, and began to prepare to meet the threatened calamity. It was unavoidable, and the only question was, where it should fall. The weakness of our system, and the comparative strength of theirs, turned the shock on ours, but of the approach of which the exchanges gave, as I have stated, no indications almost to the last moment. And even then, so artificial are exchanges, and so liable to be influenced by other causes besides the excess of currency on one side and the deficit on the other, after it began to show unfavourable indications, we all remember that a single individual, at the head of a state institution, I mean Mr. Biddle, by appearing in New-York, and bringing into market bonds on England drawn on time, turned the current, and restored the exchange. All this conclusively proves, that when there is a general expansion (the most dangerous of all), exchanges give no indication of the approach of danger, and, of course, their regulation, on which the senator relies, affords no protection against it.

I might go farther, and show that at no time is it to be relied on as the index of the relative expansion or contraction in different countries, and that it is liable to be influenced by many circumstances besides those to which I have alluded, some of which are fleeting, and others more permanent. It presupposes the perfect fluidity of currency, and that it is not liable to be obstructed or impeded by natural or artificial causes in its ebbs and flows; which is far from being true, as I have already shown in the instance of Mr. Biddle's operation preceding the late shock. In fact, it may be laid down as a rule, that where the currency consists of convertible paper, resting on a gold and silver basis, the small portion of specie which may be required to uphold the whole has its fluidity obstructed by so many and such powerful causes as to afford no certain criterion of the relative expansion of the currency between it and other countries, and, of course, afford no certain rule of regulating banking operations. The subject is one that would require more time to discuss than I can bestow on the present occasion; but of its truth we have a strong illustration in the state of things preceding the late shock, when, as I have stated, the exchanges remained favourable to the banks, while the vast amount of our imports, and the unusual character of many of the articles imported, clearly indicated that our currency was relatively greatly expanded compared with those countries with which we have commercial relations.

To correct the defects of the system, the senator must go much deeper. The evil lies in its strong tendency to increase; and that, again, in the extraordinary and vast advantages which are conferred on it beyond all other pursuits of the community, which, if not diminished, must terminate in its utter destruction, or an entire revolution in our social and political system. It is not possible that the great body of the community will patiently bear that the currency, which ought to be the most stable of all things, should be the most fluctuating and uncertain; and that, too, in defiance of positive provisions in the Constitution, which all acknowledge were intended to give it the greatest possible stability.

XXIII.

SPEECH ON THE BILL TO PREVENT THE INTERFERENCE OF CERTAIN FEDERAL

OFFICERS IN ELECTIONS, FEBRUARY 22, 1839.

MR. CALHOUN said: I belong, Mr. President, to that political school which regards with a jealous eye the patronage of this government, and believes that the less its patronage the better, consistently with the objects for which the government was instituted. Thus thinking, I have made no political move of any importance, for the last twelve or thirteen years, which had not for its object, directly or indirectly, the reduction of patronage. But, notwithstanding this, I cannot bring my mind to support this bill, decidedly as I approve of its object. Among other difficulties, there is a constitutional objection which I cannot surmount, and which I shall, without farther remark, proceed to state and consider.

This bill proposes to inflict the penalty of dismission on a large class of the officers of this government who shall electioneer, or attempt to control or influence the election of public functionaries either of the General or State Governments, without distinguishing between their official and individual character as citizens; and the question is, Has Congress the constitutional right to pass such a law? That, again, involves a prior, and still more general question: Has this government the authority to interfere with the electoral rights of the citizens of the states?

In considering this general question, I shall assume, in the first place, what none will deny, that it belongs to the states separately to determine who shall, and who shall not, exercise the right of suffrage; and, in the second, that it belongs to them, in like manner, to regulate that right; that is, to pass all laws that may be necessary to secure its free exercise on the one hand, and to prevent its abuse on the other. I next advance the proposition, which no one in the least conversant with our institutions, or familiar with the Constitution, will venture to question, that, as far as citizens are concerned, this right belongs solely to the states, to the entire exclusion of the General Government, which can in no wise touch or interfere with it without transcending the limits of the Constitution. Thus far there can be no difference of opinion.

But a citizen may be also an officer of this government, which brings up the question, Has it the right to make it penal for him to use his official power to control or influence elections? Can it, for instance, make it penal in a collector or other officer who holds a bond, in his official character, on a citizen, to threaten to enforce it if he should refuse to vote for his favourite candidate? I regard this proposition as not less clear than the preceding. Whenever the government invests an individual with power which may be used to the injury of others or the public, it is manifest that it not only has the right, but that it is in duty bound to prevent its abuse, as far as practicable. But it must be borne in mind that a citizen does not cease to be one in becoming a federal officer. This government must, accordingly, take special care, in subjecting him to penalties for the abuse of his official powers, that it does not interfere in any wise with his private rights as a citizen, and which are, as has been stated, under the exclusive control of the states. But no such care is taken either in this bill or the substitute proposed by its author. Neither makes any distinction whatever between the official and private acts of the officer as a citizen. The broadest and most comprehensive terms are used, comprehending and subjecting all acts, without discrimination as to character, to the proposed penalty. Under its pro